At today’s Specialist Lending Expo, hosted by Brightstar Group in partnership with OSB, industry leaders offered an optimistic outlook for the lending and housing markets, projecting a resurgence in borrowing and property activity in 2025 and beyond.
A key theme among the speakers was an anticipation of economic stabilisation, characterised by decreasing interest rates, manageable inflation, and a robust appetite for specialist lending.
In the introductory session, Rob Jupp, CEO of the Brightstar Group, said: “Brightstar predicts a more positive and lucrative 2025.”
Jupp said that demand for specialist lending was on the rise, with projections indicating that between 10 and 14 million borrowers may seek specialist mortgage products in the coming years.
This positive market sentiment was reflected among advisers, with Jupp reporting that brokers had expressed a more favourable outlook compared to the uncertainties of 2023.
In his keynote speech, Darren Winder, head of Lazurus Economics and Strategy, provided insights into the anticipated trajectory of interest rates, suggesting that borrowers may benefit from a series of rate cuts if the economy follows the Bank of England’s expectations.
He said: “More interest rate cuts are coming as long as the economy evolves in the way the [Monetary Policy Committee (MPC)] expects it to.”
He also noted that after a period of rapid rate hikes, the Bank of England’s base rate is anticipated to stabilise at between 3% and 3.75%, which could offer a respite to those looking to refinance or enter the housing market.
Inflation was projected to be less of a concern moving forward, with expectations that it would broadly remain below the Bank’s 2% target in 2025.
As inflation cools, Winder said “the rates people are paying to refinance are coming down,” allowing borrowers to secure more favourable deals.
Another positive sign for the housing market is the unexpected resilience of house prices, which have recovered to pre-pandemic levels, with “monthly housing transactions averaging around 80,000.”
This stability, combined with favourable lending conditions, supported the industry’s confidence that “overall levels of mortgage lending, and housing activity more generally, are set to strengthen further in 2025 and 2026.”
However, experts cautioned that there may still be “mortgage headwinds” into 2025 and 2026, largely driven by the gap between loan and deposit growth.
Winder said: “Total loans [are] growing by 1% and deposits [are] growing by 5%” – an imbalance that may continue to shape the lending landscape.
Nonetheless, with the base rate stabilising and an influx of borrowers seeking specialist products, the industry is well-positioned for growth in the coming years.
